Question

Chuck Wagon Grills, Inc., makes a single product-a handmade specialty barbecue grill that it sells for $300. Data for last year's operations follow. 0 9,700 8,900 800 S Units in beginning inventory Units produced Units sold Units in ending inventory Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Pixed costs: Fixed manufacturing overhead Fixed selling and administrative Total fixed costs 140 $ 190,000 850,000 $1,040,000 Required: 1. Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill 2. Assume that the company uses variable costing. Prepare a contribution format income statement for last year. 3. What is the company's break-even point in terms of the number of barbecue grills sold? Complete this question by entering your answers in the tabs below. Required Required Required Assume that the company uses variable costing. Compute the unit product cost for one barbecue grill. Unit product cost Required 1 Required 2 >

Answer 1

Requirement: 1 Unit Product cost using Variable Costing Direct Material Direct Labor Variable Overhead Cost per unit 80.00 20.00 10.00 110.00 2670000 979000 267000 Requirement: 2 Chuck wagon Grills, Inc Variable Costing Income Statement Sales ( 8900 * $300 Per unit) Variable Expense Variable cost of goods sold (@110) Variable Selling and Administrative Expense @30) Total Varible Expenses Contribution Margin Fixed Expenses : Fixed manufacturing Overheads Fixed Sellingand Administrative Expenses Total fixed Expenses Net Operating Income 12460001 1424000 190000 850000 1040000 384000

Requirement: 3 Break even point = Fixed cost / Contribution margin per unit Fixed cost 1040000 Contribution margin = $300 - 140 160 Break even point units 6500